In what is the most audacious VOD plan to date, Universal Pictures will release Brett Ratner’s Tower Heist on VOD three weeks after the movie opens in theaters on November 4th. However, the rental will cost a hefty $59.99. This VOD plan marks the biggest move yet in the recent battles between studios and theaters over when movies should go to VOD. This past spring, Warner Bros., Sony, Universal, and 20th Century Fox launched Home Premiere, a premium VOD service that offers movies for home viewing only two months after their theatrical debut. While these VOD rentals aren’t cheap (it costs $30 to rent a movie on Home Premiere), studios have been looking for new revenue streams since the collapse of the DVD market, and they believe (correctly) that the high price of tickets and concessions coupled with the poorly-run theater experience could drive consumers to premium VOD.
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Obviously, theater owners are furious over this plan since it not only reduces the window between theatrical release and home viewing, but because Tower Heist could be a huge hit. It has the stars, a sound comic premise, and it covers multiple demographics. If the movie becomes a word-of-mouth success and the family wants to stay home on Thanksgiving weekend, then they have a serious option waiting on VOD.
According to the LA Times, this test case “will be offered in Atlanta and Portland, Ore., to approximately 500,000 digital cable subscribers of Universal’s corporate parent, Comcast Corp.” Universal and Comcast reportedly selected the cities “because they were seeking midsize markets that have a certain number of digital cable subscribers and movie-going patterns similar to other cities where premium VOD won’t be available.” However, it will be difficult to know how successful Universal will be in their VOD attempt since, unlike box office, revenue from VOD rentals isn’t announced to the public (unless it’s highly lucrative in which case you can expect Universal to start bragging all over the place). However, to avoid accusations the studio is favoring Comcast (or doing exactly what was feared when the companies merged), Universal “will offer other cable and Internet companies the chance to release Tower Heist via video-on-demand at the same time and on the same terms as Comcast.”*
Sadly, I doubt theaters will get the message. They could retaliate by not showing the movie at all, but that would be the smart play and I count on major theatre chains to do the exact opposite of that. VOD is where the business is heading. Price and the quality of the streaming service will fluctuate but eventually the studios will hit the sweet spot. Theaters will most likely respond in their standard inept fashion: raise ticket prices, raise concession prices, and do nothing to improve the theater-going experience. At some point, the big screen isn’t going to be enough and unless theaters start figuring that out, they’re going to go out of business. They can be as mad at the studios as they want, but their fury should be directed at their own foolishness.
*As someone who has tried to rent movies using Comcast in the past, I will say right now without hesitation: Don’t do it. Their streaming service is a disaster. Unless you want Ben Stiller and Eddie Murphy’s comical actions stuttering into your TV, keep your $60.